Title: Portfolio Update 2026 (Part I) — A look at every position in Our Portfolio Show: Compounding Quality (Substack, compoundingquality.net) Guest: Pieter Slegers (author) Date: 2026-JAN-22 URL: https://www.compoundingquality.net/p/portfolio-update-2026 Length: written post (paid) — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session (the API body stopped at the paywall). Text verbatim; UI chrome (like/share counts, webinar registration buttons, subscribe CTAs) removed. Charts and the "overview of all positions" screenshot are images not reproduced here; every per-position weight, performance figure and valuation number below is from the prose. Part I covers the nine smallest positions by weight; Part II (25 January) covers the nine largest.
Hi Partner
I hope you celebrated the start of the year well with you and your loved ones.
May all your wishes come true.
Let's give you an update about every position in Our Portfolio today.
Investing Masterclass: Quality investing in 2026
Join us for an insightful discussion on the most important trends shaping Quality Investing today.
January 29, 2026 | 2 PM ET / 8 PM CET Online Event
Portfolio Overview
Here are the essentials of Our Portfolio in a nutshell:
18 Top-Quality Companies: We own eighteen of the world's best businesses
Double-Digit Growth Expected: Our companies should grow their intrinsic value by 13.6% in 2026.
Cash Flow Keeps Growing: Back in 2016, Our Portfolio made $11,985 in Free Cash Flow. Today? $82,100.
Rare Buying Opportunity: Our Portfolio is trading at the cheapest valuation level of the past 10 years
How the Portfolio is Positioned
Our strategy is built on three buckets:
Owner-Operator Stocks (73.1% of Our Portfolio)
Monopolies & Oligopolies (20.7% of Our Portfolio)
Cannibal Stocks (6.2% of Our Portfolio)
Over the past year, we've increased our exposure to Owner-Operators from 66.3% to 73.3%.
Owner-Operators tend to outperform the market in general.
It is hard not to be incredibly optimistic about the year ahead.
Now let's dive into a review of the companies we own.
How did they perform recently and is the investment case still intact?
Here's an overview of all positions:
In this article, we rank all companies from lowest to highest weight.
Constellation Software ($CSU)
How does the company make money? Constellation Software is the best serial acquirer in the world. The stock has consistently compounded at +30% per year. Just 15 years after their IPO in 2006, Constellation had already joined the 100-bagger club. It's an amazing business.
Weight in Portfolio: 2.8% Performance (%): -19.5%
Update investment case
Constellation buys niche software companies that have:
A loyal customer base
Strong market positions
Active in Vertical Market Software (VMS)
Vertical Market Software is designed specifically for niches or industries, giving it high switching costs and pricing power.
It's a very attractive industry.
The most interesting development since we bought Constellation Software?
Insiders are buying too.
Mark Miller, the COO recently bought $3.6 million of Constellation Software stock.
We love to see this kind of conviction from the people who know the business best.
Current valuation level
Forward PE: 17.7x (lower than its 5-year average? < 31.5x? YES)
Expected Return from Our Earnings Growth Model: 14.4% YES
Reverse DCF - Required FCF Growth for a 10% yearly return: 11.1% (Realistic growth expectations? YES)
Long-term estimated EPS-Growth: 17.7%
10-year CAGR FCF: 21.5%
Constellation Software looks very attractively valued right now if you ask me.
It's currently facing its biggest drawdown in its entire history as a public company.
Source: Fiscal.ai
General advice Constellation Software = Strong Buy Constellation Software is the best serial acquirer in the world. Investors can pick up the stock at more than reasonable valuation levels today.
Judges Scientific ($JDG)
How does the company make money? Judges Scientific acquires and operates niche scientific instrument makers, making money by selling highly specialized lab equipment.
Weight in Portfolio: 3.5% Performance (%): -26.2%
Update investment case
The entire life sciences industry has been struggling recently. This hasn't been different for Judges Scientific
Why?
US research funding slowdown: Federal budget cuts are reducing research spending
Increasing Chinese competition: Competitive pricing and better offerings could pressure Judges' market share
Customer concentration risk: Heavy dependence on universities and publicly funded labs.
The good news?
Analysts expect Judges to return to growth in the next few years.
Source: Fiscal.ai
The other significant news is that in February, founder David Cicurel will step down as CEO after more than 20 years.
He will remain with the company as Non-Executive Chair.
Tim Prestidge, currently the company's Group Business Development Director, will take over as CEO.
His credentials include:
22 years in senior roles at major firms like Halma and Renishaw (both of which use a similar "buy-and-build" model).
Holds a PhD in theoretical physics.
He joined Judges in early 2023, allowing for a smooth multi-year transition.
Current valuation level
Forward PE: 19.9x (lower than its 5-year average? < 26.7x? YES)
Expected Return from Our Earnings Growth Model: 11.9% YES
Reverse DCF - Required FCF Growth for a 10% yearly return: 9.2% (Realistic growth expectations? UNSURE)
Long-term estimated EPS-Growth: 6.6%
10-year CAGR FCF: 18.5%
General advice Judges Scientific = Buy Judges Scientific had a hard time recently. The valuation is not expensive and Tim Prestidge is the perfect man to follow up David Cicurel.
Brookfield Corporation ($BN)
How does the company make money? Brookfield Corporation is a global owner of real assets and a world-class manager of other people's capital. It's one of the world's most sophisticated investors in infrastructure, real estate, renewables, and private equity.
Weight in Portfolio: 3.5% Performance (%): +1.1%
Update investment case
The most interesting development since we bought Brookfield?
They're launching a cloud service called Radiant to compete with AWS and IREN.
As Brookfield owns so much physical infrastructure, they have some strong competitive advantages.
Brookfield plans to undercut competitors on price because they already own the necessary power, real estate, and renewable energy infrastructure.
They are focusing on "AI Factories" for large corporations and entire countries that want sovereign AI infrastructure.
They will use the cloud for their own needs and sell the excess capacity to third parties. (Similar to what Amazon did with AWS)
Brookfield's management has stated their goal is to grow the intrinsic value of the company by 15% per year.
If they can do this, the value of Brookfield Corporation should double every 5 years.
Current valuation level
Forward P/DE: 20.2x (lower than its 5-year average? < 12x? NO)
Expected Return from Our Earnings Growth Model: 10.9% YES
General advice Brookfield Corporation = Buy Brookfield Corporation is an amazing business. It's the ideal cornerstone for every Portfolio.
Interparfums ($IPAR)
How does the company make money? Interparfums is a leading fragrance business. The company manufactures, markets, and distributes a wide range of fragrances under licensing agreements.
Weight in Portfolio: 3.8% Performance (%): -20.2%
Update investment case
Interparfums has experienced a lot of difficulties recently:
Macro & consumer headwinds: demand is softer as consumers are cautious in spending on discretionary items like fragrances, especially in Europe.
Geopolitical instability: uncertainty in global markets is weighing on consumer confidence and retailer ordering.
Competitive pressure: higher competition in certain segments makes sell-ins weaker, even though sell-outs (end-consumer demand) are more resilient.
Tariff impact: 15% tariffs on EU exports to the US and ~55% tariffs on Chinese components are squeezing margins despite some offset from pricing actions.
As a result, the stock is trading at one of its cheapest valuation levels ever.
Source: Fiscal.ai
But the business continues to grow, adding new brands to its portfolio.
Off-White (first sales expected in 2027)
Annick Goutal (sales to start in 2026, with 2027 the first full year of sales)
Longchamp, which is projected to become a $100 million business in three to five years, with a major launch expected in late 2026 or early 2027.
Current valuation level
Forward PE: 19.5x (lower than its 5-year average? < 26.4x? YES)
Expected Return from Our Earnings Growth Model: 15.0% YES
Reverse DCF - Required FCF Growth for a 10% yearly return: -0.3% (Realistic growth expectations? YES)
Long-term estimated EPS-Growth: 13.8%
10-year CAGR FCF: 16.6%
General advice Interparfums = Buy Interparfums trades at its cheapest valuation level of the past 10 years.
OTC Markets ($OTCM)
How does the company make money OTC Markets is a platform where people can buy and sell stocks that aren't listed on big exchanges like the NYSE or NASDAQ.
Weight in Portfolio: 3.8% Performance (%): +3.1%
Update investment case
OTC Markets is the company we own that I'm the least sure about.
Why?
Growth has stalled and it looks like it's a more structural problem than initially thought.
Source: Fiscal.ai
Some good news about OTC Markets?
Stock exchanges are one of the most profitable business models in the world.
OTC Markets has a Net Profit Margin of 26.9% (!).
On top of that, the company has a shareholder yield of over 5%.
Current valuation level
Forward PE: 19.6x (lower than its 5-year average? < 21.6x? YES)
Expected Return from Our Earnings Growth Model: 11.9% YES
Reverse DCF - Required FCF Growth for a 10% yearly return: 6.2% (Realistic growth expectations? YES)
Long-term estimated EPS-Growth: 8.0%
10-year CAGR FCF: 11.1%
General advice OTC Markets = Hold How structural are the issues OTC Markets is facing? There might be better investment opportunities in the market today.
Visa ($V)
How does the company make money? Visa makes money by processing payments and charging fees for using its card network. They dominate the market together with Mastercard.
Weight in Portfolio: 4.0% Performance (%): +12.3%
Update investment case
Visa is one of the most boring, but high quality companies we own.
It's virtually impossible to take away the oligopoly that Visa and Mastercard have built.
The company still has the tailwind of less and less cash being used in the world.
In Q4, Visa grew U.S. payment volume by 8%, and International payment volume by 10%.
We expect Visa's steady growth to continue in the years ahead.
It's one of those boring compounders that keep executing on their long term goals.
Source: Fiscal.ai
Visa and Mastercard are both down after Trump proposed a 10% credit card interest rate cap.
The good news? I think Trump will never be able to push this through in court.
Source: Fiscal.ai
Visa is a pure cash machine that translates more than 50% (!) of its sales in pure cash.
The company has a dividend yield of 0.8% and buys back roughly 2.3% of its outstanding shares every single year.
This means the shareholder yield equals 3.1% per year.
If you combine this with an expect earnings growth of 12% per year, you could expect the stock to double every 5 years.
Current valuation level
Forward PE: 25.4x (lower than its 5-year average? < 28.2x? YES)
Expected Return from Our Earnings Growth Model: 12.7% YES
Reverse DCF - Required FCF Growth for a 10% yearly return: 13.7% (Realistic growth expectations? UNSURE)
Long-term estimated EPS-Growth: 12.9%
10-year CAGR FCF: 13.3%
General advice Visa = Buy Visa is a Buy. It's a company that is ideal as a cornerstone for your Portfolio as they are very profitable and generate predictable cash flows.
HgCapital Trust ($HGT)
How does the company make money? HG Capital Trust is the Private Equity company in Our Portfolio. They invest in and grow unlisted software and technology services companies, making money from capital appreciation and dividends.
Weight in Portfolio: 4.1% Performance (%): -1.9%
Update investment case
Most Private Equity firms have a very strong track record in creating shareholder value.
They tend to outperform the market in general.
As of 30 September 2025, HG Capital Trust had £2.5 billion in net assets.
Net asset value per share had increased to 550.4p (up from 539.5p in June).
It may not seem like a big change.
But if we think long-term and zoom out to the 20-year performance, we see very impressive numbers.
Source: HG Capital Trust Investor Relations
Most companies HG Capital Trust invests in are critical software and services.
That means resilient businesses with recurring revenue.
This is something we absolutely love.
Current valuation level
NAV per Share (Intrinsic Value): £5.50 (Higher than current stock price? > £5.0 YES)
General advice HG Capital Trust = Buy It's interesting to have some Private Equity in your portfolio. HG Capital Trust has the best track record in Europe.
Topicus ($TOI.V)
How does the company make money? Topicus is a spin-off from Constellation Software. It's a serial acquirer focusing on Vertical Market Software (VMS) companies in Europe.
Weight in Portfolio: 4.3% Performance (%): -6.5%
Update investment case
Topicus is an Owner-Operator with significant growth potential.
They aim to reinvest most of their Free Cash Flow in acquisitions with a high ROIC.
The market is concerned that AI will disrupt software companies like the ones Topicus buys, but I don't think that's likely.
Why?
VMS companies provide critical software tailored to specific niches (e.g., healthcare or construction). This leads to:
Low Churn: Customers rarely switch because the software is deeply integrated into their workflows.
High Pricing Power: Due to a lack of viable alternatives and the critical nature of the product, these companies can raise prices effectively.
Deep Relationships: Being "customer-centric" allows these firms to build exactly what clients need, fostering long-term loyalty.
AI can make it easier to code, and create software, but AI can't replace the industry-specific expertise and the human relationships that you need to sell and customize niche software.
This is the same issue that's bringing down the share price of Constellation Software.
Just like Constellation Software, Topicus is having a large drawdown in its stock price.
Source: Fiscal.ai
But Topicus continues to execute well, acquiring great companies.
Here a few of the recent ones.
Scalepoint (Denmark): Insurance software for handling claims.
Comarch HIS (Poland): Healthcare software for hospitals and clinics.
Sobis (Romania): Local government and tax software; marks their first entry into Romania.
Asseco (Poland): Topicus now owns about 25% of Asseco (the largest IT company in Poland).
The most important thing to see?
Topicus keeps growing its Free Cash Flow.
Source: Fiscal.ai
Current valuation level
Forward PE: /
Expected Return from Our Earnings Growth Model: 13.3% YES
Reverse DCF - Required FCF Growth for a 10% yearly return: 10.4% (Realistic growth expectations? UNSURE)
Long-term estimated EPS-Growth: /
10-year CAGR FCF: 25.7% YES
General advice Topicus = Strong Buy The recent decline of VMS software companies offers potential opportunities for long term investors.
Brown & Brown ($BRO)
How does the company make money? Brown & Brown is an American insurance company. They act as a middleman to find the right coverage for things like cars, homes, health, or businesses.
Weight in Portfolio: 5.1% Performance (%): -10.9%
Update investment case
Brown & Brown is an amazing family business that we didn't initially buy a full position in due to valuation concerns.
We fixed that in October of last year when the stock price declined by 1/3 from its peak in April.
Source: Fiscal.ai
We love to take advantage of price declines in great businesses like Brown & Brown that benefit from:
Recurring revenue Strong free cash flow Very low capital needs
The market is currently more competitive in the insurance industry. As a result BRO declined over the past few months.
However, I truly believe Brown & Brown will continue to thrive in the years ahead.
Current valuation level
Forward PE: 17.3x (lower than its 5-year average? < 24.5x? YES)
Expected Return from Our Earnings Growth Model: 11.8% YES
Reverse DCF - Required FCF Growth for a 10% yearly return: 5.9% (Realistic growth expectations? YES)
Long-term estimated EPS-Growth: 10.0%
10-year CAGR FCF: 13.0%
General advice Brown & Brown = Strong Buy I think the company looks really attractive today for long-term quality investors.
Conclusion
That's if for today.
On Sunday, we'll cover the top positions from Our Portfolio:
Dino Polska
Novo Nordisk
Kinsale Capital
Ameriprise Financial
Games Workshop
Evolution AB
Kelly Partners Group
LVMH
Medpace
And always remember… In the long term, stock prices always follow the evolution of the intrinsic value.
This is a slide to always keep in mind.
The conclusion? We are invested in amazing companies.
Talk to you on Sunday!
Everything in life compounds Pieter (Compounding Quality)
Book Order your copy of The Art of Quality Investing here
Used sources Interactive Brokers: Portfolio data and executing all transactions Fiscal.ai: Financial data
Disclaimer As a reader of Compounding Quality, you agree with our disclaimer. You can read the full disclaimer here.